In 2012 Annual Conference, Wednesday

By: Gia Ciccone

We heard from Allyson Vento, Senior Vice President of The Abernathy MacGregor Group, about constructing a CEO apology. Vento is highly experienced in crisis communications and describes the CEO apology as a necessary step in the crisis management progress for any industry.

Vento stressed the elements of a well-executed CEO apology:

  1. Speak first and directly to the audiences that matter most.
  2. Own the issue and don’t try to dodge the blame.
  3. Offer a credible fix to the issue and make sure you can follow through on your promises.
  4. Cooperate fully to show the company’s commitment.
  5. Be prepared ahead of time.

Vento noted that in the crisis management tool kit, a CEO apology is only one of the tools necessary to begin to control a crisis situation. She also noted the four key considerations when dealing with a crisis:

  1. When is a CEO apology necessary? The CEO apology shouldn’t always be used. If it affects the brand and reputation, the CEO is necessary. For other crisis events that don’t threaten reputation, a CEO isn’t necessary because it will only elevate the issue and signal to the world that it’s a big deal, which may not be appropriate.
  2. Who are the key audiences? The community, investors, customers and clients are all obvious key audiences to many businesses and companies. Vento does not consider media a key audience but instead a messenger and communicator between your key audiences and your company and its statements.
  3. What should be said and when? Remember, what is said first usually has the most impact. This can be crucial to the outcome of a crisis, and the first comments should be made once all of the information has been brought to the company’s attention. Speed isn’t necessarily the best and a knee-jerk reaction, which is common in crisis, and can require a retraction of the original statement or a signal a lack of sincerity from the company
  4. How should key audiences hear your message? It’s important to consider your target audience and hear how they would best hear your message. What forum would be most appropriate and useful to your company and the audiences you must target?

Vento gave a few examples of well-known CEO apologies that went awry and were executed very poorly.

NASDAQ

NASDAQ’s response to the Facebook IPO that caused investors to lose millions due to a NASDAQ trading problem was the first example. Bob Greifeld, NASDAQ CEO, first described the Facebook IPO release to be a “success.” Then he went on to say that they were “humbly embarrassed” for the issue that wasn’t “perfect,” but didn’t offer an apology. He insulted many market managers and Facebook for pointing the blame elsewhere. Many market participants, like UBS and Knight Investors, criticized NASDAQ in the media and pointed the finger at them for large losses. For the lack of reparation efforts, NASDAQ will be facing litigation.

Greifeld still has yet to really own up to the blame and issue a formal apology for the actions and errors of NASDAQ.

Vento believes that NASDAQ would’ve been better served by communicating to those who have been directly affected –investors and brokers who lost money due to the error. A broad apology would have been much more effective than the route that NASDAQ took because even now there are still many customers who are severely disappointed with the NASDAQ exchange. Now Facebook is even considering switching to the NYSE due to way NASDAQ handled the situation.

Carnival Corp.

Vento brought up the Carnival Corp. reaction to the sinking of their ship Costa Concordia – which resulted in the deaths of 32 passengers. CEO Micky Arison, taking a vacation in St. Barts at the time, apologized for the accident and family losses after seeing reports via Twitter. Many survivors were angry at Carnival’s lack of compassion or concern. Carnival made little effort to aid survivors with problems such as lost belongings or travel and hotel accommodations. Two weeks later, while many survivors were still stuck in Italy, Arison was spotted at an NBA basketball game in the United States.

It was clear that Carnival was not sincere or apologetic for passenger deaths. Arison claimed that no matter what he said, he would have been criticized for his actions. His presence was severely lacking, and Carnival as a whole was not attentive to survivors’ needs. Only two months later Arison came forward with a public apology, but it was too little too late. There were too many “no comments” prior to coming forward, which upset and outraged both the public and the media.

BP

Let’s not forget about one of the most infamous apologies of the decade: BP’s CEO Tony Hayward in response to the oil spill in the Gulf. Hayward, in the first press release statement after the incident, avoided the blame for the spill; instead, Hayward pointed the finger of blame at the Deepwater Horizon drilling rig.

“It wasn’t our accident, but we are absolutely responsible for the oil, for cleaning it up,” he stated.

While so many gallons of oil were still pumping into the Gulf, BP failed to communicate a solution to the problem. Instead, millions of people watched live as there were many failed attempts to cap it off. In addition to the media coverage of what seemed like an endless problem, Hayward’s comments, comparing the large ocean waters to a “tiny” amount of oil did not resonate well with his key audience. One drop of oil in the ocean was too much to the public, but Hayward’s lack of compassion for that, no matter the scientific facts, became a major issue. Eventually, Hayward stepped down and as since been replaced by Robert Dudley.

 

After discussing these poor examples of public CEO apologies, Vento brought up and applauded some of the CEO apologies that were administered correctly and did not cause immense damage to the companies involved.

Domino’s

Domino’s faced the crisis of a disgusting YouTube prank gone viral. The video showed Domino’s employees tampering with their food in the kitchen of one of their locations. Within 48 hours of the incident, CEO Patrick Doyle thanked the online community for quickly reporting the incident to Domino’s and apologized immediately in his very own YouTube video. Doyle also offered a thoughtful solution that included reworking and heavily inspecting their hiring practices.

Typically, 24 hours is a more ideal time frame for a well-executed crisis response; however, Domino’s wanted to be absolutely sure that they had located correct store and employees involved in the incident. Doyle’s apology worked well because it was sincere and offered a credible fix of reworking and carefully checking their hiring practices. Doyle spoke directly to those audiences that matter, and Domino’s carefully chose the right forum to communicate with customers. By using YouTube, they were able to make their apology available to target audience views, and they were even able to link it back to the original video (which could not be taken down due to free speech rights).

JetBlue

Jetblue is another example of a well-executed CEO apology by David Neeleman. The crisis involved thousands of people with cancelled flights, and many trapped for hours on the tarmac on Valentine’s Day in 2007. People were angry, frustrated and uncomfortable.

However, Neeleman and JetBlue handled the crisis well. Neeleman wrote a letter to each JetBlue customer apologizing and expressing embarrassment for making travel experiences inconvenient and frustrating for the customers. Only shortly after the crisis, JetBlue introduced a “Customer Bill of Rights” policy to show customers what can expect for any further delays or cancelations in their flights. It outlines refunds, returns or replacements for flights and future problems. JetBlue wanted to show their customers sincerity and a sign of compassion, and fully executed that through these crisis response efforts.

Swissair

The Swissair Flight 111 crash, although back in 1998, is still a solid example of how to handle such an unforgettable tragedy. After the crash was reported and there seemed to be no survivors, CEO Jeffrey Katz said that it was his “personal priority” and the priority of Swissair was to offer support to those who lost their loved ones in the accident.

Swissair representatives, including Katz, arrived at the airport within an hour to assist those who lost loved ones in the crash. They brought in grieving counselors that were made available for these families. Swissair even sent letters of condolences to every family, which included checks of $20,000 to cover burial and travel expenses. Swissair even transported families out to the crash site as a way to memorialize and grieve over family members and friends they lost.  Vento mentioned that families were so moved by Swissair efforts and compassion, that their reputation was far form tarnished.

Before Vento wrapped up, she again mentioned the elements of a good CEO apology and how important they were to maintain a solid reputation for your company.

 

Allyson Vento provides public relations, investor relations, and transaction and crisis communications counsel and services to clients in a range of industries.

Vento has expertise in advising clients in all phases of crisis preparedness and response. Her crisis management experience spans a broad range of issues, including regulatory matters, complex litigation, product failures or recalls, facilities disasters and unexpected management changes.

Vento also has significant experience in advising clients on transaction communications including: hostile and friendly mergers and acquisitions, proxy contests and defense against activist investors.

Vento joined Abernathy MacGregor in 2004 after graduating with honors from The University of Richmond.

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